Very good question. I think there are two factors. One is the "let's try it" new drinker or other brand loyalist who creates an extension of the brand. Then there's the drinker loyal to the brand extending their engagement. Personally, I don't like to drink past 5pm in the evening, but I'll gladly pick up a NA at 8pm as a refresher.
Great insight! But I’m not understanding the math here. If it costs the producer an extra 10% to take the alcohol out of the beer, but they effectively save 15% for no alcohol tax, how are you getting 30-40% savings for the producer?
I worded it poorly. Revenues are 15% higher for NA, costs are 10% higher. So your margin on the NA ends up being slightly higher but compared to the alcoholic version (because it's a higher revenue base) it's a much higher profit. Let me illustrate:
Got it! Thanks for explaining. This is insightful. It’s awesome what we learn during all those side discussions at BRK. People are wonderful to share openly. A great experience. 👍
Very good question. I think there are two factors. One is the "let's try it" new drinker or other brand loyalist who creates an extension of the brand. Then there's the drinker loyal to the brand extending their engagement. Personally, I don't like to drink past 5pm in the evening, but I'll gladly pick up a NA at 8pm as a refresher.
Great insight! But I’m not understanding the math here. If it costs the producer an extra 10% to take the alcohol out of the beer, but they effectively save 15% for no alcohol tax, how are you getting 30-40% savings for the producer?
I worded it poorly. Revenues are 15% higher for NA, costs are 10% higher. So your margin on the NA ends up being slightly higher but compared to the alcoholic version (because it's a higher revenue base) it's a much higher profit. Let me illustrate:
Regular beer: $100 revenue, $78 cost = $22 profit or 22% margin
NA beer: $115 revenue (15% greater than regular), $86 cost (86/78= 10% greater than regular) = $29 profit or 29% margin.
Difference is 7 percentage points of margin but 29/22 = 32% greater profit.
Got it! Thanks for explaining. This is insightful. It’s awesome what we learn during all those side discussions at BRK. People are wonderful to share openly. A great experience. 👍